Business Financial Plan

Your business financial plan will help you to assess the costs associated with your business, estimate your projected business income and determine your cash flow needs. Without accurate and up to date financial reports and projections you will have no idea how money is flowing into and out of your company. Keep in mind, if you are new to managing business finances, an accountant or bookkeeper will be able to offer a lot of good advice when you are preparing your business financial plan.

The information here is presented to give you an overview of basic information that is typically included in a business plan financial statement and analysis. It is not meant to substitute for the advice of a professional who can set up your books for you and give you good insight into developing effective financial policies.

There are several worksheets that are normally used for financial projections and statements, the most important are the:

Income Statement, which shows whether your business is making a profit.

Typically you'd prepare monthly projections for the first year, quarterly projections for years two and three and annual projections for years four and five.
Categories on your income statement may include (but are not limited to): gross sales, salaries and wages, employee benefits, payroll taxes, rent, maintenance, equipment, interest expenses, utilities, postage, office supplies, marketing, travel, entertainment/meals, insurance, professional services, telephone/telecommunications, other.

Cash-Flow Projection, which shows whether the company has the cash required to pay upcoming bills.

Typically you'd prepare monthly projections for the first year and quarterly projections for years two and three.

Balance Sheet, which shows how much the company is worth in total.

Quarterly projections for the first year and annual projections for years two to five are typical.

Keep in mind, when you are preparing your business financial plan, some data you include will be estimates. This is particularly true if your company is a start-up; the more experience you have in an industry, the more accurate your estimates will tend to be. Be conservative with your estimates, don't assume the best possible scenario will unfold.

Although you may need to estimate, your estimates should be well researched. Be prepared to justify any data you include. You'll need to explain any assumptions you make in order to arrive at certain figures you have quoted.

In order to complete this section of your business plan, you'll need to access statistical data about your industry and target market. Much of this information can be found through your government census as well as report published by professional associations. The business research sources page provides links to several sources of this type of information.

Preparing your business financial plan can feel daunting if you are not accustomed to this type of work. Do remember, thus is one area in which professional advice can be very helpful, particularly if business accounting and bookkeeping is new to you.

Additional Resources
Business plan outline with links to further information about each section
The Successful Business Plan by Rhonda Abrams book review